With the economy being what it is here in Colorado, we are fielding plenty of calls from people who have just been laid off. If you work for a company with 20 or more employees and if you were covered under an Employer Sponsored Group Health Insurance plan, then you generally become eligible for COBRA benefits. In Colorado, if the company has fewer than 20 employees, the odds are you’ll be offered extremely similar coverage to COBRA that is called State Continuation Coverage.
By the way, COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. Got that? Well don’t worry as we’ll try to break this down into very general plain English terms. Employers aren’t always on top of administering benefits so it pays to know what your rights are and their obligations are.
The employer’s group plan administrator is responsible for sending you an election notice for COBRA or State Continuation Coverage within 14 days of their being advised of the qualifying event. Qualifying events are things like the covered employees’ loss of job, reduction of hours of covered employee, death of the covered employee or the covered employee becoming eligible for Medicare.
At a minimum, each qualified beneficiary has at least 60 days from the election notice date to decide if they want to elect the COBRA or State Continuation Coverage benefits. So, time to kick back and relax, right? No way! If you want to look at a lower cost individual plan you need to apply and find out if you’ll be accepted or not before the end of that 60 day COBRA election period.
Also, you can get coverage for a single family member, that is not necessarily the employee, if necessary. This can be a blessing if you have a single family member with a hard to insure health condition or pre-existing condition. Employers almost never tell employees about this so you’ll need to ask for the price if just one family member were to elect COBRA
Generally, you can keep your COBRA or State Continuation Coverage up to a maximum of 18 months. However, in the event of the death of the covered employee, divorce from the covered employee, if the employee becomes eligible for Medicare or if a child loses dependency status, then the COBRA benefits can potentially be extended an additional 18 months for a total of 36 months.
Once you have elected COBRA you then have 45 days to pay the premiums, but don’t be late! Your employer is under no obligation to mail you a statement or bill each month, so you need to be very careful and disciplined about making sure your initial and subsequent COBRA or State Continuation Coverage premium payments are made on a timely manner.
Of course, this is a general overview and you may have a unique situation so if you are a Colorado resident with any COBRA questions and if you want to shop to see if you might be able to do better in the individual health insurance market be sure to work with a qualifed local Broker.